Yesterday's market plunge caught many off guard. Bitcoin fell below the $100,000 mark, and the Nasdaq also took a sharp hit. Even safe-haven asset gold was not spared, dropping nearly 1%. This decline was not triggered by a sudden panic event, but rather by a single statement from a Federal Reserve official that directly shattered the market’s hopes for a dovish policy.

The cause of the issue is straightforward: Minneapolis Fed President Kashkari stated yesterday that a rate cut in December is "not necessarily" happening. Just this one sentence caused the market to explode. It’s important to note that the current US stock and crypto markets are almost entirely supported by expectations of rate cuts. Like a thirsty person in the desert fixated on a distant water source, the market has long regarded a December rate cut as a lifeline.

Data also supports this. According to the CME FedWatch Tool, last week, 70% of Wall Street believed there would be a 25 basis point cut in December. However, once Kashkari spoke, that probability was cut in half to 47%. In other words, what was once a "high likelihood of a cut" has now become a 50/50 situation where a cut may or may not happen.

Adding to the concern, the US government recently ended a 43-day shutdown, but this was only a temporary solution, with funds lasting until January 30 next year. There are still 9 appropriations bills pending in Congress, and if they cannot be finalized in two months, another shutdown could occur. On one hand, the expectation of rate cuts is cooling off; on the other, the government’s finances are still patching holes, which naturally impacts market confidence.

Honestly, such volatility is not uncommon in the crypto market.